INCREASING FUNCTION AND DECREASING FUNCTION

A function f is said to be increasing on an interval (m, n) if the slope of the tangent line is
positive [ f ( x)  0 ] at all point x in interval (m,n)
f(x) f(x)

f (x) > 0
f (x) > 0
f (x) > 0

f (x) > 0

x x
(a) Increasing function (b) Increasing function

A function f is said to be decreasing on an interval (m, n) if the slope of the tangent line is
negative [ f ( x)  0 ] at all point x in interval (m, n)
f(x) f(x)

f (x) < 0

f (x) < 0
f (x) < 0

f (x) < 0

x x
(c) Decreasing function (d) Decreasing function

Example :
Determine where the function is increasing or decreasing for y  f ( x)  x 2  5 x  6 .

y   f ( x)  2 x  5
2x  5  0
x  5/ 2

If x  5 / 2 f (x) negative
If x  5 / 2 f (x) positive
Function is increasing in interval (5 / 2,)
Function is decreasing in interval (,5 / 2)

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Example :
Determine where the function is increasing or decreasing for y  f ( x)  x 3  9 x 2  24 x  2 .
f ( x)  3x 2  18 x  24
f ( x)  0
3x 2  18 x  24  0
3( x  4)( x  2)  0
x  4,2

x2 2 x4 x4

2 4
f (1) positive
f (3) negative
f (7) positive
 Function is increasing in interval (,2), (4, )
Function is decreasing in interval (2,4)

APPLICATION OF RATE OF CHANGE

Example
Given revenue function r  30q  0.3q 2 . Find the marginal revenue at q = 2.
r  30 q  0.3q 2
r   30  0.6q
r (2)  30  0.6(2)  28.80
Example
Given cost function c  0.1q 2  3 . Find:
(i) Marginal cost using first principle method.
(ii) Marginal cost at q = 4. Interpret.

(i) c  c  0.1(q  q) 2  3

c  0.1(q 2  2qq  2 q)  3  c
c  0.1q 2  0.2qq  0.12 q  3  0.1q 2  3
 0.2qq  0.12 q
c 0.2qq  0.12 q q (0.2q  0.1q )
   0.2q  0.1q
q q q
dc c
 had  had 0.2q  0.1q  0.2q
dq q 0 q q 0

dc
(ii)  0.2(4)  0.8
dq q 4

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 When output increases by 1 unit, from 4 unit to 5 unit, the increase in cost is
approximately RM 0.80

The real cost incurred when producing the additional unit is:
c(5)-c(4)=RM 0.90

Example
5000
Given the average cost is c  0.0001q 2  0.02 q  5  , find marginal cost.
q
c
c
q
c  cq

 5000 
c   0.0001q 2  0.02q  5  q  0.0001q 3  0.02q 2  5q  5000
 q 
c  0.0003q  0.04q  5
2

ELASTICITY
 Measures how a change in one variable will affect another variable. Refers to the
responsiveness of one variable to change in another variable.
 A unitless measure
𝑝𝑒𝑟𝑐𝑒𝑛𝑡𝑎𝑔𝑒 𝑐ℎ𝑎𝑛𝑔𝑒 𝑖𝑛 𝑌
∈=
𝑝𝑒𝑟𝑐𝑒𝑛𝑡𝑎𝑔𝑒 𝑐ℎ𝑎𝑛𝑔𝑒 𝑖𝑛 𝑋

Demand Elasticity

 Measure the percentage change in quantity demanded to a given percentage change in

price
𝑝𝑒𝑟𝑐𝑒𝑛𝑡𝑎𝑔𝑒 𝑐ℎ𝑎𝑛𝑔𝑒 𝑖𝑛 𝑞𝑢𝑎𝑛𝑡𝑖𝑡𝑦
∈=
𝑝𝑒𝑟𝑐𝑒𝑛𝑡𝑎𝑔𝑒 𝑐ℎ𝑎𝑛𝑔𝑒 𝑖𝑛 𝑝𝑟𝑖𝑐𝑒

q / q q p q p
    .
p / p q p p q
q dq
As p0, therefore had 
p 0 p dp
dq p
 .
dp q

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When |  | <1 demand is inelastic
Percentage change in quantity < percentange change in price
P
||<|

P1

P2

0 Q1 Q2 Q

|| >1 demand is elastic

Percentage change in quantity > percentage change in price

P
||>|

P1
P2

0 Q1 Q2 Q

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 || =1 demand is unit elastic
Percentage change in quantity = percentage change in price

P
||=|

P1

P2

0 Q1 Q2 Q

Example

Given demand function as p  20  0.2q . Determine the demand elasticity at q = 10.

Interpret.

p  20  0.2q
dp
  0 .2
dq
dq 1 1
 
dp  0.2 0 .2

If q  10, p  20  0.2(10)  18

dq p 1  18 
 .     9
dp q 0.2  10 
9

Demand is elastic.

At q = 10 unit, 1% increase in price will lead to 9% decrease in quantity

demanded.

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HIGHER-ORDER DERIVATIVES
Function

differentiate

First derivative (a function)

differentiate

Higher-order derivatives

Notation:
dy d
First derivative y f (x) [ f ( x)] Dx y
dx dx
d2y d2
Second derivative y ’ f(x) [ f ( x )] Dx2 y
dx 2 dx 2
d3y d3
Third derivative y f ( x ) [ f ( x )] Dx3 y
dx 3
dx 3
d4y d4
Fourth derivative y(4) f(4)(x) [ f ( x )] Dx4 y
dx 4 dx 4

Example

Given f ( x)  6 x 3  12 x 2  6 x  2 . Get f ( x), f ( x)

f ( x)  18 x 2  24 x  6
f ( x)  36 x  24
f ( x)  36